NOTE 5—INCOME TAXES

The U.S. and International components of income before income taxes consisted of the following for the years ended December 31, 2012, 2011 and 2010:


In thousands
	2012		2011		2010
United States	$	357,076	$	307,909	$	273,891
International		60,121		64,415		57,962

Total income before income taxes	$	417,197	$	372,324	$	331,853

Significant components of our income tax expense for the years ended December 31, 2012, 2011 and 2010 are as follows:


In thousands
	2012			2011		2010
Current
United States—federal	$	95,864		$	99,481	$	72,733
United States—state and local		14,034			10,205		9,356
International		17,192			11,906		15,864

		127,090			121,592		97,953
Deferred
United States—federal		25,028			7,690		19,834
United States—state and local		3,881			2,589		3,254
International		(8,743	)		3,110		355

		20,166			13,389		23,443

Total provision	$	147,256		$	134,981	$	121,396

A reconciliation of the income tax provision computed at the federal statutory rate to the effective tax rate for the years ended December 31, 2012, 2011 and 2010 are as follows:


	2012			2011			2010
Federal statutory income tax rate		35.0	%		35.0	%		35.0	%
Effect of:
State and local taxes, net of federal tax effect		2.9	%		2.2	%		2.5	%
Foreign tax rates		(1.2	)%		(1.6	)%		(1.2	)%
Other		(1.4	)%		0.7	%		0.3	%
Effective tax rate		35.3	%		36.3	%		36.6	%

Cash payments for income taxes were $104.7 million, $76.6 million and $66.5 million for the years ended December 31, 2012, 2011 and 2010, respectively.

Our deferred tax liabilities and assets as of December 31, 2012 and 2011 were as follows:


In thousands
	2012			2011
Deferred tax liabilities:
Property, plant and equipment	$	(37,112	)	$	(34,699	)
Goodwill and intangibles		(357,453	)		(318,624	)

Total deferred tax liabilities		(394,565	)		(353,323	)
Deferred tax assets:
Accrued liabilities		24,251			22,124
Other		23,896			22,296
Net operating tax loss carry-forwards		12,973			18,259
Less: operating tax loss valuation allowance		(3,340	)		(3,775	)

Total deferred tax assets		57,780			58,904

Net deferred tax liabilities	$	(336,785	)	$	(294,419	)

At December 31, 2012, net operating loss carry-forwards for U.S. federal and state income tax purposes have been fully utilized, excluding net operating loss carry-forwards related to our acquisitions. The net operating loss carry-forwards from foreign and domestic acquisitions are approximately $32.1 million and certain of these net operating loss carry-forwards begin to expire in 2015. Of these, $8.5 million have a valuation allowance offsetting the benefit. The valuation allowance primarily represents loss carry-forwards for which limitations are in place and utilization before their expiration is uncertain. Changes in our valuation allowance during 2012 were primarily related to adjustments to acquisition accounting.

Undistributed earnings of foreign subsidiaries are considered permanently reinvested, and therefore no deferred taxes are recorded thereon. The cumulative amounts of such earnings are $159.2 million at December 31, 2012, and it is not practicable to estimate the amount of tax that may be payable upon distribution assuming repatriation.

We and our subsidiaries file U.S. federal income tax returns and income tax returns in various states and foreign jurisdictions. With a few exceptions, we are no longer subject to U.S. federal, state, local, or non-U.S. income tax examinations by tax authorities for years before 2008.

The Company has recorded accruals to cover certain uncertain tax positions. Such uncertain tax positions relate to additional taxes that the Company may be required to pay in various tax jurisdictions. During the course of examinations by various taxing authorities, proposed adjustments may be asserted. The Company evaluates such items on a case-by-case basis and adjusts the accrual for uncertain tax positions as deemed necessary. The estimated amount of liability associated with the Company’s uncertain tax positions that may change within the next twelve months cannot be reasonably estimated.

The total amount of unrecognized tax positions as of December 31, 2012 is $16.1 million. The amount of unrecognized tax positions that, if recognized, would affect the effective tax rate is approximately $15.3 million. We recognized interest and penalties accrued related to income tax reserves in the amount of $0.3 million and $0.7 million, for the years ended December 31, 2012 and 2011, respectively, as a component of income tax expense.

The following table summarizes the changes in unrecognized tax positions during the years ended December 31, 2012 and 2011:


In thousands
Unrecognized tax positions, December 31, 2010	$	9,239
Gross increases—tax positions in prior period		242
Gross decreases—tax positions in prior period		0
Gross increases—current period tax positions		2,609
Settlement		(108	)
Lapse of statute of limitations		(1,210	)

Unrecognized tax positions, December 31, 2011	$	10,772

Gross increases—tax positions in prior period		2,284
Gross decreases—tax positions in prior period		0
Gross increases—current period tax positions		4,119
Settlement		0
Lapse of statute of limitations		(1,071	)

Unrecognized tax positions, December 31, 2012	$	16,104